In recent times appearance on CNBC's “Squawk Box,” Tom Lee, Fundstrat Capital CIO and head of research, suggested that Bitcoin may still have a ways to go before it makes a big comeback. During the Jan. 13 segment, Lee talked about the broader market concerns — such as inflation, bond yields, and earnings — before drawing a parallel to the crypto space, specifically Bitcoin's trajectory.
Could Bitcoin Fall Into The $50,000s?
“Bitcoin is down about 15% from its highs which for a hyper volatile asset is a normal correction and follows global liquidity. We are early in the semicircle” Lee said, stressing that price movements of this magnitude are common in the digital asset space. He also elaborated on technical indicators indicating future volatility, saying, “One level would be $70,000.”
A less likely scenario, but still possible, is a crash into the $50,000s. “It could go as low as $50,000. But again that's not a new level. That's where it touches before it starts to accumulate,” Lee said.
Related Reading
Lee's view paints a picture of a two-fold price movement for Bitcoin: a potential drop to the “$50,000s,” followed by a climb to, in his words, “perhaps $200,000 or $250,000.” He noted that despite the possibility of a downward trend, long-term holders should not be deterred.
“Bitcoin is something you have to focus on for the long term. I don't think anyone is losing money buying here at $90,000. If they are trying to do this, maybe they will get lucky and it will go to $70,000 but for me, Bitcoin could be much higher this year, maybe $200,000 or $250,000. So, I think $90,000 is still a good entry point,” said the Fundstrat CEO.
Lee's comments came amid a wider debate on market dynamics. The discussion opened with the recent lowering of rates and whether the Federal Reserve's decision to stop rate cuts would worry investors. Lee pointed to the upcoming inflation data as a critical pivot, explaining, “We've been correcting now for almost a month… I'd like to see CPI come in under 2.5% or so. I think that would give confidence to markets as well as employment.”
Related Reading
He went on to highlight what he sees as short-term noise around inflation statistics, which are affected by external events such as hurricanes and fires. “The hurricanes last year have damaged the quality of inflation a little bit because for example, hotels would go up… It will also affect the prices of cars,” said Lee, adding that once these anomalies clear, that overall inflation could be lower.
In discussion Federal Reserve PolicyLee maintained a balanced stance, saying, “I think the best case scenario is the Fed making one cut because the economy is strong enough and they're still shy… They'll make their way to neutral. If they push the cuts to 2026 and 2027, that's a longer period to support markets. ” He believes the markets remain sensitive to policy uncertainty, especially under a new administration.
When asked if stocks were overvalued, Lee drew a parallel with bond yields: “To me, the ten year even if it reaches 5%, is a multiple of 20 PE on a ten year bond… The average PE is 17 trips. I think stocks give you much better value than bonds right now.”
At press time, BTC was trading at $95,618.
Featured image created by DALL.E, a chart from TradingView.com
